Why Doesn’t My W-2 Match My Last Pay Stub?

Discrepancies between your annual W-2 form and your final pay stub’s year-to-date gross pay are common. This article clarifies why these differences occur and provides guidance on understanding and resolving them.

Understanding Your W-2 and Pay Stub

Your W-2, or Wage and Tax Statement, is an official document issued by your employer at the end of each calendar year. This form summarizes your total annual earnings and the taxes withheld from your pay during the tax year (January 1 to December 31). It is a document for filing your federal, state, and local income tax returns. Key boxes on the W-2 include Box 1 for taxable wages, tips, and other compensation, Box 3 for Social Security wages, Box 5 for Medicare wages, and Boxes 2, 4, and 6 detailing the corresponding withheld taxes.

A pay stub is a record provided with each paycheck that details your earnings and deductions for a specific pay period. It outlines your gross pay, various pre-tax and post-tax deductions, and your net pay for that period. Pay stubs also typically include year-to-date totals for these amounts.

Common Reasons for Differences

One frequent reason for a difference between your W-2 Box 1 and your final pay stub’s year-to-date gross pay involves timing. The W-2 strictly covers wages paid within the calendar year (January 1 through December 31). If your final pay period extends into the next calendar year, or if there is a lag between the end of a pay period and the actual payday, wages for those periods might be included in the following year’s W-2.

Pre-tax deductions are a primary cause for discrepancies. Certain deductions are taken from your gross pay before income taxes are calculated, thereby reducing your taxable income reported in Box 1 of your W-2. Examples of such deductions include contributions to traditional 401(k), 403(b), or 457(b) retirement plans, pre-tax health insurance premiums, and contributions to Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs). These amounts are part of your gross pay on your pay stub but are excluded from your W-2 Box 1 wages because they are not subject to federal income tax.

The distinction between taxable and non-taxable income or benefits can also lead to differences. Some amounts included in your gross pay on a pay stub, such as certain reimbursements or qualified non-taxable fringe benefits, might not be included in Box 1 of your W-2 because they are not considered taxable wages. Conversely, certain taxable benefits are included in Box 1 of your W-2, even if they are not explicitly itemized as taxable income on a typical pay stub.

Employers may also make adjustments or corrections to payroll after the final pay stub has been issued but before W-2 forms are generated. These adjustments could be for overpayments, underpayments, or reclassification of income, and they would affect the W-2 without being reflected on previously issued pay stubs. Genuine payroll errors can also occur, causing discrepancies.

Steps to Investigate Discrepancies

To investigate any differences between your W-2 and your last pay stub, begin by gathering all relevant documents. You will need your W-2 form and all pay stubs issued for the calendar year, particularly the final one. Having these records available will facilitate your review.

Next, compare the “Year-to-Date Gross Pay” figure on your last pay stub with the “Wages, tips, other compensation” amount reported in Box 1 of your W-2. This direct comparison is the starting point for identifying the magnitude of any discrepancy. Then, calculate the total of all pre-tax deductions from your pay stubs for the entire year. These typically include contributions to retirement plans (like 401(k)), health insurance premiums, and contributions to FSAs or HSAs. If you add this total amount of pre-tax deductions to the figure in Box 1 of your W-2, it should approximately match your total gross pay from your pay stubs.

It is also advisable to review other boxes on your W-2, such as Box 3 for Social Security wages and Box 5 for Medicare wages. These amounts often include certain pre-tax deductions that are excluded from Box 1, providing additional context for your earnings. If, after this detailed review, you are unable to reconcile the discrepancy, contact your employer’s payroll or human resources department. When reaching out, be prepared to provide specific details from your W-2 and pay stubs to assist them in their investigation.

Correcting an Error

If a genuine error is confirmed, your employer is responsible for issuing a corrected W-2. This corrected form is officially known as Form W-2c, “Corrected Wage and Tax Statement.” The W-2c supersedes the original W-2 and is used to fix inaccuracies such as incorrect names, Social Security numbers, or wage amounts.

While there is no specific deadline for employers to issue a W-2c, they are generally expected to correct errors as quickly as possible. If you have not yet filed your tax return, you should use the corrected W-2c to ensure accuracy. If you have already filed your taxes using the incorrect W-2, you will likely need to file an amended tax return.

To amend a previously filed federal income tax return, you would use Form 1040-X, “Amended U.S. Individual Income Tax Return.” This form allows you to correct income, deductions, credits, or other information. Filing an amended return might result in an adjustment to your tax liability, potentially leading to a larger refund or additional tax due. The Internal Revenue Service (IRS) typically takes several weeks to process amended returns. If your employer is unresponsive or fails to issue a corrected W-2c in a timely manner, you may contact the IRS for assistance.